The Difference Between Fundraising and Development

Fundraising. Resource Development. It’s the same thing, right? Or is it?

Many people use these terms interchangeably, but I think there’s a significant difference, especially for folks working in a small shop. When you’re overworked and maybe overwhelmed, it’s easy to get caught up in the frenzy of raising money. You need the dollars, right? Gotta make budget, right?

Programs can’t be delivered without funds, right?

Right, right, and right.

Except that sometimes it’s wrong to focus just on the dollars.

Fundraising is about raising money however you can.

Development is about building relationships with people who give because they believe in the work your nonprofit is doing. The deeper the relationship, the more they give.

Where’s the problem here?

Consider these situations:

Case A: The Executive Director of a small nonprofit is responsible for everything – administration, fundraising, supporting the Board, and overseeing operations. The organization hosts a variety of small fundraising events during the year, which generate some publicity and attract lots of people through ticket sales.

Case B: A regional nonprofit produces a very popular 5K race that is highly anticipated each year among area runners. A local restaurant is the main sponsor and provides a lavish picnic at the end of the race to all the runners.

Case C: A well-known and respected local organization sends out an annual direct mail piece in the Fall. The appeal brings in a small amount of money, which goes directly toward the bottom line of its annual fundraising campaign.

This all sounds good right?

Except that it’s not. In each of these cases, money is being raised. But that’s about it. None of these activities are sustainable they way they are. None are being leveraged to their capacity. And none are creating relationships with donors which is the core of sustainable fundraising.

Here’s the rest of the story.

Case A: This organization has gotten itself on the special event hamster wheel. In the absence of knowledge, the Board focuses on events. That’s all the members know how to do so that’s what they do. And while the community supports each of the small events, many people consider their ticket purchase as their “gift” to the organization, which leaves no room for individual donor development. And frankly, some people in the community are getting tired of all the events (not to mention how tired the staff is of working on them!).

What Development might look like: If this organization cut out half of its events and instead spent the time on developing relationships with its best individual donor prospects, it would come out way ahead in the long run. All these events don’t provide sustainable funding for the organization and the important work it does in the community. Committed individual donors would give this nonprofit a strong base of support. Individuals who feel a connection to the organization and a loyalty to its mission will give year after year. It’s like having a group of good friends who will stick with you no matter what.

Case B: At first glance, this seems like a good event. But when you consider staff time in the budget, this event could be losing money or at best breaking even (which is very common with this kind of event). Also consider that the audience is very limited, and that people typically sign up for races to improve their personal running time, not necessarily to support the cause.

What Development might look like: This organization needs to go one of two ways: either modify the event to appeal to a wider audience or stop doing the event. To modify the event, the nonprofit might add a walk, encouraging participants to seek pledges and focusing on how the money from the event will make a difference. This will help increase both the quantity and quality of participants. With careful strategy, the walk participants can become donors to the organization.

Case C: This is a case of smoke and mirrors. The organization is so focused on hitting their annual fundraising goal that they count every dollar they possibly can add in the total. Their direct mail appeal isn’t particularly well done and goes out to a list of people who aren’t regularly communicated with.

What Development might look like: The result is a lackluster response, and when you look at the expenses, the nonprofit is losing money on this activity. The organization needs to do a better job overall of cultivating relationships with donors, including keeping them updated about the work being done in the community to change lives. A strong appeal mailed after a series of meaningful communications will likely generate significantly more revenue for the organization. The real lesson here is to focus on the nonprofit relationships. Communicate, share, tell stories, and help the donor feel good about their decision to give. Don’t just show up in their mailbox or inbox with your hand out all the time.

In each of these scenarios, looking at just the dollars raised doesn’t reveal the whole story. These activities are focused on the immediate money raised and are considered fundraising activities. In order to build for the future, each organization needs to shift its focus away from fundraising and instead pay attention to development – developing donor relationships which lead to long-term sustainability.

What People are Saying

“About 4 years ago we were deep in the hole. Thanks to Sandy and her system, we now have 6 months operating expenses in a reserve fund and an endowment! We have stable and diversified funding and strong individual donors. Not to mention a lot less stress!”